Moscow Massacre: ‘98

It’s another example of the vehemence of the South Asian financial crisis. Russia, heavily dependent on its oil exports, suddenly felt the jolts as the South Asian economies came crashing down. The sudden cooling of commodity prices was a major set back to trade revenues of the government. Furthermore, in order to keep inflation in control and to stabilize the exchange rates during the pre-crisis years, Russia sold its foreign exchange reserves. This left the Russian government, dependent on borrowings, with little leeway to maneuver; and it finally succumbed to the pressures of capital flight, with the Russian government defaulting on all its debt obligations.

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Source IIPM-Editorial,2006